Adoption of open source software in business models: a Red Hat and IBM case study

Abstract

Free / Libre open source software (FLOSS/OSS) has gained increasing popularity and utilisation in commercial and governmental organisations. Universities like Harvard and Stanford now offer courses on open source as a business and also on how businesses can compete with open source firms. However, very little research has been published in regards to the influence of OSS on business strategies; the use of OSS as a viable business or its value proposition within a commercial entity. The business model, a powerful tool for extracting economic value from the potential of technological innovation, clearly plays an important role in the success of a business. In this paper we investigate the role of open source in the business models of Red Hat and IBM and describe how OSS has contributed to their success. A framework recently developed by some of the authors is used to evaluate and identify the key factors important to the integration of OSS strategies into traditional business models.